<p>WASHINGTON – CUNA supports credit unions and other financial institutions being able to join more than one home loan bank at the same time but has asked the federal housing finance board (FHFB) to adopt some restrictions on large institutions doing so. The subject arose after Washington Mutual Inc., (WAMU) which describes itself as the seventh largest financial services holding company in the country, petitioned for approval to join a federal home loan bank in a district where it has no charter, according to an FHFB source. In the course of considering the WAMU petition, the FHFB soon realized the issue was much larger than one institution and solicited further comment. In a March 4 letter, CUNA wrote in support of multiple memberships with restrictions on larger institutions. CUNA asked that large institutions have to justify discounts for high transaction volumes to keep smaller institutions from being disadvantaged and that large institutions should only be allowed to join federal home loan banks in districts where they do at least 10% of their business. "To limit any adverse impact on smaller financial institutions, we recommend that the Finance Board guard against unreasonably deep discounts for high transaction volumes conducted by larger institutions," CUNA wrote. "We believe this can be accomplished by requiring FHLBanks to justify such discounts and to ensure that these discounts are not detrimental to those smaller institutions that have lower transaction volumes. We also believe that a financial institution seeking membership in an adjoining district should demonstrate that a material portion of its business, such as 10% or more, is derived from sales or other activities that originate in the district that the institution seeks to join." Further, no financial institution should be able to join more than three banks and should be able to participate in no more than one election for bank boards of directors, CUNA argued. "A total of three memberships should provide all institutions with sufficient choice and flexibility, while preventing a single institution from unduly influencing the FHLBank system." CUNA recommended that institutions with multiple memberships be required to designate one FHLBank as their "primary" one and vote only in the election of the directors of their "primary" FHLBank. "Stock owned in other FHLBanks should be designated as non-voting stock. This limitation on electing directors would ensure that large financial institutions do not exercise an inordinate amount of influence on the FHLBank system to the detriment of smaller institutions or those that choose not to join more than one FHLBank," CUNA wrote. Joining different home loan banks would offer credit unions a number of benefits, CUNA wrote. "These members could not only compare pricing, but could actually choose different products from each FHLBank." Credit union members of more than one bank could also gain a better understanding of their marketplace, CUNA added.</p>